GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

EFFECTIVE FISCAL YEAR 2017

 PREPARED BY:

CREDIT REFORM SUBCOMMITEE AND

GENERAL LEDGER AND ADVISORY BRANCH

FISCAL ACCOUNTING OPERATIONS

BUREAU OF THE FISCAL SERVICE

U.S. DEPARTMENT OF THE TREASURY
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 2 of 97 August 2017

Version Number Date Description of Change Effective

USSGL TFM

1.0 07/2004 Original Version S2-04-01

2.0 08/2017 Updated Transaction Codes, financial statements and

appendices.

2017-06
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 3 of 97 August 2017

Overview

This guide is designed for those who:

• Formulate and execute Federal credit program budgets including accounting for assets, liabilities, net position, income, 

expenses, and budgetary resources

• Prepare agency financial statements; 

• Audit agency financial statements; 

• Design and maintain computer systems for financial and accounting programs; and

• Instruct others in basic accounting and reporting for foreclosed property in Federal credit programs.

The guide is illustrative, rather than authoritative, and is categorized as “other accounting literature” in the hierarchy of accounting 

principles for Federal entities.1 It supersedes the original and subsequent foreclosed property scenarios. Users may download the guide 

from the Fiscal Service Web site at 

https://www.fiscal.treasury.gov/fsreports/ref/ussgl/approved_scenarios/approved_scenarios.htm#creditreform.

In order to understand and gain the most from the guide, users must have a working knowledge of the following: 

• Budgetary and proprietary accounting and related reporting;

• United States Standard General Ledger (USSGL) accounts for basic annual operating appropriations and revolving funds. 

• Federal credit program accounting and reporting;

• The Credit Reform Act and requirements established by the Act; and

• Fund structures. 

1

.See OMB Circular A-136, Financial Reporting Requirement, dated October 2016.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 4 of 97 August 2017

The guide is divided into four scenarios:

1. Foreclosed property taken with recourse, Post-Credit Reform.

2. Foreclosed property taken without recourse, Post-Credit Reform.

3. Foreclosed property taken with recourse, Pre-Credit Reform.

4. Foreclosed property taken without recourse, Pre-Credit Reform.

“With recourse” means that, if the net cashflows related to the foreclosed property are insufficient to pay the defaulted debt in full, the 

Federal credit agency may take further action against the borrower to collect the remainder. Conversely, if net cashflows are in excess 

of the debt, the agency must refund the excess to the borrower. 

“Without recourse” means that if the net cashflows related to the foreclosed property are insufficient to pay the defaulted debt in full, 

the Federal credit agency must write off the remaining debt. If the net cashflows are greater than necessary to repay the debt, the 

agency retains the excess. The loan contract with the borrower should indicate the terms of the loan.

The provided scenarios are not intended to be comprehensive. They cover common transactions and reports, focusing on property 

transactions unique to Federal credit program accounting. For example, the guide does not discuss undelivered orders with advances, 

because these orders are relatively rare and are not unique to credit program accounting.

The foreclosed property Credit Reform scenarios use net realizable value, rather than present value, as the basis for accounting. If 

agencies operate programs under Pre-Credit Reform based on present value, the foreclosed property accounting would be the same as 

that in the foreclosed property Post-Credit Reform scenarios.2

2

Under SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees, agencies may use either net realizable value or net present value as the basis for Pre-Credit Reform 

accounting.
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IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 5 of 97 August 2017

The scenarios illustrate beginning, pre-closing, and post-closing trial balances. Where appropriate, the resulting yearend agency 

reports listed below are shown:

• Balance Sheet;

• Statement of Net Cost;

• Statement of Changes in Net Position;

• Statement of Budgetary Resources;

• Program and Financing Statement;

• Credit Program Footnote (including Schedule of Changes in the Allowance for Subsidy).3

The illustrated transactions within each scenario are:

• Formulation, apportionment, and allotment of the budget;

• Acquisition of foreclosed property;

• Repairs and maintenance on foreclosed property;

• Rental of foreclosed property prior to sale;

• Incurrence of expenses related to rental of foreclosed property prior to sale;

• Sale of foreclosed property;

• Collecting shortfalls from, recording shortfalls to, or paying excess cash to “with-recourse” borrowers;

• Closing entries.

In addition, two appendices are attached. Appendix 1 discusses fiscal yearend adjustments to the valuation of the property not sold by 

the yearend. Appendix 2 provides a listing of key references related to credit program accounting.

Direct questions regarding this guide to the General Ledger and Advisory Branch at https://www.fiscal.treasury.gov/ussgl/reportan-issue.html, using the USSGL Issue Form.

3

OMB Circular A-136, Footnote 8
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 6 of 97 August 2017

Conceptual Framework

The transactions in this guide are based on property acquired and sold in the same year and are for a fictitious Federal agency with a 

single direct-loan-program cohort and no-risk categories. The entries essentially are the same for direct loan or loan guarantee 

programs, and disclosure is made where there are differences. For Pre-Credit Reform, it is assumed that the agency is operating from 

its collections rather than from appropriations. Therefore, no entries to show appropriations used are necessary, and net position 

consists only of cumulative results of operations. (Accounting for appropriations used is illustrated for the program fund in separate 

guides for direct loans and loan guarantees under Credit Reform.)

The guide uses USSGL account numbers and, generally, USSGL account titles. The guide expands account titles, where used, for 

illustrative purposes only, for the specific information being captured. For example, in order to capture information to separate loans 

receivable related to direct loan programs and those related to loan guarantee programs, which must be segregated in the financial 

statements, “[Direct]” is placed after the USSGL account title 135000, Loans Receivable [Direct]. For defaulted loans receivable, 

USSGL account title 135000 includes “[Defaulted Guaranteed]” after the account title: 135000 Loans Receivable [Defaulted 

Guaranteed]. 

Entries are in general journal form, using USSGL accounts, and are summarized in trial balances for each year. Note that the financing 

fund is used only in the transactions for Post-Credit Reform scenarios, and the liquidating fund is used only in the transactions for PreCredit Reform scenarios.

USSGL accounts that, by themselves, do not directly provide the reporting that is illustrated, are supplemented with additional detail. 

The entries made and the method chosen to illustrate the detail provide only one-way of accounting. Agencies may have other ways of 

structuring their ledgers and making journal entries to accomplish the same result.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 7 of 97 August 2017

Account Tables

The following account tables identify the accounts used in the guide to record transactions and prepare reports. Since the transactions 

are not comprehensive, the tables do not contain all accounts that agencies may use in day-to-day activities. The accounts used are 

presented and categorized by budgetary, proprietary, and memorandum accounts, as they relate to the changes in the loan guarantee 

level.4 Note that USSGL-accounts used in the scenarios that are enhanced to capture the information are illustrative rather than 

authoritative. 

The budgetary accounts apply to both financing funds (Post-Credit Reform) and liquidating funds (Pre-Credit Reform). The 

memorandum accounts relate only to financing funds. Many of the proprietary accounts apply to both financing and liquidating fund 

transactions, but some are applicable to only one of the two. Proprietary accounts that relate only to the financing fund are indicated 

with a “(F)” following the title, and accounts that relate only to the liquidating fund are indicated with a “(L)” following the title. If the 

account applies to both funds, it is not indicated with either. 

The memorandum accounts are included primarily for use in preparing the required Post-Credit Reform schedule. The schedule 

illustrates the changes in the beginning and ending values for the allowance.5 

Lastly, one account structure required by the parameters of the agency used in the scenario is not illustrated. The case agency is given 

a “Category B” apportionment, in which it must avoid over-obligating the amount of the apportionment separately for each category. 

For proper administrative funds control, the agency would need a set of these status accounts for each category. 

4

The direct loan guide illustrates a similar set of accounts to report the changes in the allowance for subsidy account in a Post-Credit Reform direct loan program.

5

Note that SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and Loan Guarantees, requires a schedule of changes in the Post-Credit Reform allowance for 

subsidy account only for direct loan programs. A schedule for the allowance related to defaulted guaranteed loans in a Post-Credit Reform loan guarantee program is not required. 

In addition, these schedules are not required for Pre-Credit Reform direct loan or loan guarantee programs.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 8 of 97 August 2017

Listing of USSGL Accounts Used in This Scenario

It is necessary to separately report Credit Reform loans receivable, interest receivable, foreclosed property, and the related allowance 

for subsidy related to direct loans and to loan guarantees. Agencies may do this through use of fund symbols or through other 

attributes associated with USSGL accounts. This guide will use the basic USSGL accounts involved, and add information to the titles 

to indicate the distinction.

Account Number Account Title

Budgetary

406000 Anticipated Collections From Non-Federal Sources

420100 Total Actual Resources-Collected

426500 Actual Collections From Sale of Foreclosed Property

445000 Unapportioned Authority

451000 Apportionments 

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

461000 Allotments - Realized Resources

490100 Delivered Orders - Obligations, Unpaid

490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed Property]
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Proprietary

101000 Fund Balance With Treasury

131000 Accounts Receivable 

134100 Interest Receivable - Loans

134500 Allowance for Loss on Interest Receivable - Loans

135000 Loans Receivable [Direct]

135900 Allowance for Loss on Loans Receivable [Direct] (L)

139900 Allowance for Subsidy [Direct Loans Receivable] (F)

155100 Foreclosed Property [Direct Loans]

155900 Foreclosed Property - Allowance [Direct Loans] (L)

211000 Accounts Payable [to Borrowers Upon Sale of Foreclosed Property]6

331000 Cumulative Results of Operations7

331000 Cumulative Results of Operations (L)

610000 Operating Expenses/Program Costs [Property Rental] (L)

679000 Other Expenses Not Requiring Budgetary Resources [Change in Value of

 Foreclosed Property] (L)

711000 Gains on Disposition of Assets – Other (L)

721000 Losses on Disposition of Assets – Other (L)

6

Related only to “with recourse” foreclosures. 

7

In the financing fund, this account balance must be zero after closing. The financing fund cannot have a net cost of operations. If there is excess subsidy, the agency accrues a 

payable to transfer the excess to a designated miscellaneous receipt fund. If there is not enough subsidy, the agency accrues a receivable from the program fund for the deficiency. 

Financing sources must equal expenses, and assets must equal liabilities. Note, that the liquidating fund may have a balance in account 331000.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

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IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 10 of 97 August 2017

Memorandum

9XAA Allowance for Subsidy - Beginning Balance

9XAB Allowance for Subsidy - Contra

9XAC Allowance for Subsidy - Adj - Foreclosed Property Gain/Loss

Pre-closing equation: 9XAA = the net of the remaining accounts.

Post-closing equation: 9XAA = 9XAB.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 11 of 97 August 2017

Scenario 1: Foreclosed Property Taken With Recourse–Post-Credit Reform

The agency has been operating for a number of years. Transactions in the guide occur in fiscal year “X.” For simplicity, the agency 

will have only one cohort. Normally, the agency would need to capture and summarize Post-Credit Reform cash flow transactions by 

cohort.

This scenario presents transactions, interim and year-end trial balances, and year-end reports relating to fiscal year X. If no entries 

appear in a category of accounts (budgetary, proprietary, memorandum) for a transaction, no entries are required in the category. 

The agency had the following financing fund account balances at the beginning of fiscal year X:

Beginning Trial Balance

Debit Credit

Accounts

Budgetary

420100 Total Actual Resources - Collected8 150

445000 Unapportioned Authority 150

Total 0 0

Proprietary

101000 Fund Balance With Treasury 150

134100 Interest Receivable [Direct Loans] 650

135000 Loans Receivable [Direct] 300

139900 Allowance for Subsidy [Direct Loans Receivable] 425

155100 Foreclosed Property [Direct Loans] 25

8

Normally, a direct loan program uses its collections to repay its debt and interest to Treasury and does not have a cash balance. However, an agency may retain cash from 

collections if it needs to use the cash before it receives additional collections. For example, the agency foresees the need to make payments related to foreclosed property before 

any collections become available. If there was no available cash and payments needed to be made, the agency would have to borrow from Treasury. 
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IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 12 of 97 August 2017

Beginning Trial Balance (Continued)

251000 Principal Payable to the Bureau of the Fiscal Service 700

Total 1,125 1,125

Memorandum

9XAA Allowance for Subsidy - Beginning Balance $425

9XAB Allowance for Subsidy - Contra $425

Total 0 0
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 13 of 97 August 2017

Transactions

1-1. The agency estimated that $100 of direct loans and $500 of interest receivable would default, and that the collateral property 

involved would be foreclosed. The agency further estimated that it would receive collections of $95 from sales and $20 from rental of 

the foreclosed property. No transactions related to the existing foreclosed property at the beginning of the year were expected. OMB 

apportioned the maximum amount, and the agency followed standard procedure in providing for blanket allotment of anticipated 

collections as they are realized. The agency allotted the full allowable apportionment at the beginning of the year.

To request an apportionment from OMB

DR CR TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Source

445000 Unapportioned Authority

Proprietary Entry

None

115

115 A140

To record the OMB apportionment

DR CR TC

Budgetary Entry

445000 Unapportioned Authority

 451000 Apportionments

 459000 Apportionments Unavailable - Anticipated Resource

Proprietary Entry

None

265

150

115

A116

A118
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 14 of 97 August 2017

To record the allotment of the realized resources9

DR CR TC

Budgetary Entry

451000 Apportionments

 461000 Allotments - Realized Resources

Proprietary Entry

None

150

150 A120

9

Note that in accordance with OMB guidance (OMB Circular No. A-11, § 145.6), only the realized resources, those in the unobligated balance forward (as represented by the 

beginning balance of account 445000) can be allotted. Anticipated resources cannot be obligated until they are realized.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 15 of 97 August 2017

1-2. $100 of direct loans and $500 of interest receivable defaulted. The fair market value of the property received was estimated to 

be $450. It came with a lien of $40, which was paid.10 The loan terms provided that the foreclosed property was taken with 

recourse.

To record payment of lien and adjust loan receivable based on collateral property

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed 

Property]

Proprietary Entry

 40

40 B116 

C162

10Although collateral property should be free of liens when the Government forecloses on it, creditors may have placed liens on the property, such as for an unpaid contractor’s 

lien or for unpaid property taxes.

If the agency paid the lien in a separate transaction from the acquisition of the property, it makes a budgetary entry to credit account 490100 for $40 instead of 490200[Payments 

on Foreclosed Property]. In addition, the agency makes two proprietary entries (dr./cr.): 155100[Direct Loans] for $450/135000 for $410 and 199000 (Other Assets) or 211000 for 

$40. Upon payment, the agency would make a budgetary entry to account 490100 or 490200[Payments on Foreclosed Property], and the following proprietary entries: 

155100[Direct Loans] or 199000 and 211000 or 101000. With few exceptions, an agency may not debit or credit account 155100 unless cash has been transacted. Finally, if at the 

end of the year, a lien is still unpaid, the entry debiting account 199000 and crediting account 211000 would be reversed in the process of consolidation to avoid double-counting 

between the unpaid lien and the foreclosed property’s present value, which already contains the present value of the lien payment to be made.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 16 of 97 August 2017

155100 Foreclosed Property [Direct Loans] 

134100 Interest Receivable [Direct Loans] 11

101000 Fund Balance With Treasury 

 450

410

40

1-3. The agency paid $60 to repair the new foreclosed property.

To record disbursement

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans]12

60

60

60

 B116

11Note that the borrower is given credit for the net inflow of assets. The fair market value of the collateral property, reduced by the lien, in lieu of a cash collection. If the net fair 

market value is greater than the interest, but less than the sum of the principal and interest, the agency credits account 135000[Direct] for the difference between the amount of the 

interest receivable and the net fair market value. If the net amount is $510, then the agency credits account 134100[Direct Loans] for $500 and account 135000[Direct] for $10. If 

the net fair market value is greater than both principal and interest, the agency credits the amount in excess of accounts 134100[Direct Loans] and 135000[Direct] to account 

139900[Direct Loans Receivable], and makes a memorandum entry debiting account 9XAB and crediting 9XAC for that amount. If, for example, the net fair market value of the 

foreclosed property is $625, the agency credits account 134100[Direct Loans] for $500, account 135000[Direct] for $100, and account 139900[Direct Loans Receivable] for $25 

(the entry involving accounts 9XAB and 9XAC would be $25). Per SFFAS No. 3, Accounting for Inventory and Related Property, par. 87, this reporting follows the normal 

practice of crediting amounts first to late charges and penalties receivable (there are none in this case), then to interest receivable, then to loans receivable, and finally to the 

allowance for subsidy. If the loan contract specifies otherwise, then some other distribution consistent with the contract requirements would have to be made.

12A payment made on foreclosed property by the foreclosing agency increases the net present value of the property because, once made, the succeeding payments are less 

(remember that net present value of an asset equals the present value of cash receipts less the present value of cash payments). In theory, an agency can recognize this via a debit 

to account 139900[Direct Loans Receivable] or 155100[Direct Loans], either of which will provide the requisite increase. However, in a “with recourse” foreclosure, agencies 

must determine whether there is a net cash inflow or outflow related to the foreclosed property after sale, so they can collect cash owed from the borrower or refunded excess cash 

to the borrower. Additionally, agencies are often asked to report to OMB or the Congress on the results of their foreclosed property program. Agencies may consider using a 

subsidiary ledger for foreclosed property that shows the cash-flows by property, since good property management requires a subsidiary record of information to detail the balance 

in account 155100[Direct Loans]. Accordingly, the agency makes the cash flows related to property in this guide to account 155100[Direct Loans] rather than account 
GUIDE FOR BASIC ACCOUNTING AND REPORTING

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IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 17 of 97 August 2017

101000 Fund Balance With Treasury 60

1-4. The agency rented the new property to a third party and collected $20 for the rent.

To realize the resource

DR CR TC

Budgetary Entry

426400 Actual Collections of Rent

 406000 Anticipated Collections From Non-Federal Sources

Proprietary Entry

101000 Fund Balance With Treasury

 155100 Foreclosed Property [Direct Loans] 13

20

20

20

20

C109

To allot the realized resource

DR CR TC

139900[Direct Loans Receivable]. Note, too, that it makes no difference to the accounting treatment whether the payment is for major or for minor repairs, as it might in 

commercial sector accounting.

13Note that the credit is to account 155100[Direct Loans] instead of to account 139900[Direct Loans Receivable]. See the preceding note. (This caveat is not repeated in 

subsequent transactions involving debits or credits to account 155100[Direct Loans] instead of account 139900[Direct Loans Receivable].)
GUIDE FOR BASIC ACCOUNTING AND REPORTING

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IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 18 of 97 August 2017

Budgetary Entry

459000 Apportionments Unavailable - Anticipated Resources

 461000 Allotments - Realized Resources

Proprietary Entry

None

20

20

A122

1-5. The agency paid expenses of $30 related to rental of the new property.

To record disbursement

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders - Obligations, Paid [Payments for Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans]

 101000 Fund Balance With Treasury

30

30

30

30

 B116
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IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 19 of 97 August 2017

1-6. The agency sold the new property, which at this point is on the books at a gross value of $520, for $475, net of expenses of sale.

To record the loss on loan receivable from borrower on a sale with recourse

DR CR TC

Budgetary Entry

426500 Actual Collections From Sale of Foreclosed Property14

 406000 Anticipated Collections From Non-Federal Sources15

475

 475 C109

14The value of the entry is the net cash received. The Federal Budget normally would not report a collection of the gross amount and an unpaid, undelivered order for fees of sale 

because this could complicate preparing the Statement of Budgetary Resources. The Statement of Budgetary Resources must match net obligations to net outlays and must 

compute net outlays based on transactions reported to Treasury. The agency normally reports the transaction to Treasury, only as a net collection. Recording it as both a collection 

and a disbursement in the budgetary accounts is not appropriate unless the agency obtains approval from OMB, or is directed to do so by OMB or Treasury. If the amounts are 

material, provide a footnote explanation of any deviation from what was reported to Treasury for the Statement of Budgetary Resources.

15In transaction 1-1, OMB apportioned $115 related to anticipated collections. In transaction 1-4, the agency collected $20 for rent, leaving a balance of $95. The excess of 

collections over the anticipated amount is unapportioned unless the agency applies for a re-apportionment and OMB grants it. Therefore, the agency cannot allot the excess. Some 

agencies may handle this by allowing account 406000 to become negative and then making an adjusting entry at year-end to move the amount in account 406000 to account 

445000, as indicated in this guide. An agency may also choose to record the anticipated amount remaining in account 406000 and the excess over the amount anticipated, which is 

unapportioned, into account 445000. For example, debit account 426500 for $475, credit account 406000 for $95, and credit account 445000 for $380. As a result, a closing entry 

for accounts 406000 and 445000 would not be necessary.
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Proprietary Entry

101000 Fund Balance With Treasury

131000 Accounts Receivable [from Borrowers Upon Sale of Foreclosed 

Property] 16

 134100 Interest Receivable [Direct Loans]

 135000 Loans Receivable [Direct]

 155100 Foreclosed Property [Direct Loans]

 475

 235

90

100

520

To allot the realized resources to the extent apportioned17

DR CR TC

Budgetary Entry

459000 Apportionments Unavailable - Anticipated Resources

 461000 Allotments - Realized Resources

95

95

A122

16Alternatively, instead of using account 131000[from Borrowers Upon Sale of Foreclosed Property], the agency could record $45 ($235 - $100 - $90) to account 135000[Direct], 

leaving account 135000[Direct] (related to the new foreclosed property, that was just sold) with a balance of $145, and could make no entry make to account 134100[Direct Loans] 

(related to the new foreclosed property), which would remain at $90. In other words, instead of $235 appearing in account 131000[from Borrowers Upon Sale of Foreclosed 

Property] in the trial balance, the debit would be split between account 134100[Direct Loans], $90, and account 135000[Direct], $145 (as it relates to the new foreclosed property). 

Regardless of the method used, agencies must report all receivables related to the transaction in the credit program footnote to the Balance Sheet. Of course, the agency may writeoff the receivables against account 139900[Direct Loans Receivable], as illustrated in the guide for direct loans (or account 139900[Direct Loans Receivable] if related to defaulted 

guaranteed loans).

17In transaction 1-1, OMB apportioned $115 related to anticipated collections. In transaction 1-4, the agency collected $20 for rent, leaving a balance of $95. The excess of 

collections over the anticipated amount is unapportioned unless the agency applies for a re-apportionment and OMB grants it. Therefore, the agency cannot allot the excess. Some 

agencies may handle this by allowing account 406000 to become negative, and then making an adjusting entry at year-end to move the amount in account 406000 to account 

445000.
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Proprietary Entry

None

Transactions 1-6a and 1-6b illustrate how an agency would handle the accounting if it had received more cash than necessary to 

satisfy the debt, rather than less, as was the case with transaction 1-6. Transactions 1-6a and 1-6b are mutually exclusive of 

transaction 1-6, and are not included with the trial balance totals that follow. There are no special reporting issues involved.

1-6a. The agency sold the new property, which at this point is on the books at a gross value of $520, for $775, net of expenses of sale.

To realize the resources and record the gain sold with recourse

DR CR TC

Budgetary Entry

426500 Actual Collections From Sale of Foreclosed Property18

 406000 Anticipated Collections From Non-Federal Sources19

775

95

18The value of the entry is the net cash received. The Federal Budget normally would not report a collection of the gross amount and an unpaid, undelivered order for fees of sale, 

because this could complicate preparing the Statement of Budgetary Resources. The Statement of Budgetary Resources must match net obligations to net outlays and must 

compute net outlays based on transactions reported to Treasury. The agency normally reports the transaction to Treasury only as a net collection. Recording it as both a collection 

and a disbursement in the budgetary accounts is not appropriate unless the agency obtains approval from OMB, or is directed to do so by OMB or Treasury. If the amounts are 

material, provide a footnote explanation of any deviation from what was reported to Treasury for the Statement of Budgetary Resources.

19In transaction 1-1, OMB apportioned $115 related to anticipated collections. In transaction 1-4, the agency collected $20 for rent, leaving a balance of $95. The excess of 

collections over the anticipated amount is unapportioned unless the agency applies for re-apportionment and OMB grants it. As a result, the agency cannot allot the excess. Some 
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IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 22 of 97 August 2017

 445000 Unapportioned Authority

 490100 Delivered Orders – Obligations, Unpaid20

Proprietary Entry

101000 Fund Balance With Treasury

 211000Accounts Payable [to Borrowers Upon Sale of Foreclosed Property] 21

 134100 Interest Receivable [Direct Loans]

 135000 Loans Receivable [Direct]

 155100 Foreclosed Property [Direct Loans]

 775

115

565

 65

90

100

520

C109

C614

To allot the realized resources to the extent apportioned 22

DR CR TC

Budgetary Entry

459000 Apportionments Unavailable - Anticipated Resources

461000 Allotments - Realized Resources

Proprietary Entry

None

95

95

A122

1-6b. The agency repays the excess cash collected to the borrower.23

agencies may handle this by allowing account 406000 to become negative, and then making an adjusting entry at year-end to move the amount in account 406000 to account 

445000.

20In this case, the agency collected $65 cash in excess of that required to satisfy the underlying debt (see the proprietary entry following). Because this is a “with recourse” 

foreclosure, the agency must repay the excess to the borrower and credit account 490100. 

21In this case, the agency collected $65 cash in excess of that required to satisfy the debt. Because this is a “with recourse” foreclosure, the agency must repay the excess to the 

borrower. 

22See footnote 22.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 23 of 97 August 2017

To record payment.

DR CR TC

Budgetary Entry

490100 Delivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid [Foreclosed Property 

Transactions]

Proprietary Entry

211000 Accounts Payable [to Borrowers Upon Sale of Foreclosed Property]

 101000 Fund Balance With Treasury

65

65

65

65

B110

1-7. To record adjustments for resources realized in excess of those anticipated. 

To record payment.

DR CR TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 445000 Unapportioned Authority

Proprietary Entry

None

380

380

F116

23This assumes that the agency refunded the cash to the borrower in a separate transaction. In practice, the agency may pay the excess directly to the borrower at the time the 

foreclosed property is sold, such as through escrow. If that is the case, the agency reduces the net collection amount to $710 in the budgetary and proprietary entries for 6a and 

does not record a payable. 
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 24 of 97 August 2017

Pre-closing Trial Balance

Debit Credit

Accounts

Budgetary

406000 Anticipated Collections From Non-Federal Sources 0

420100 Total Actual Resources - Collected 150

426400 Actual Collections of Rent 20

426500 Actual Collections From Sale of Foreclosed Property 475

445000 Unapportioned Authority 380

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment 0

461000 Allotments - Realized Resources 135

490200 Delivered Orders - Obligations, Paid 130
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 25 of 97 August 2017

Total 645 645

Proprietary

101000 Fund Balance With Treasury 515

131000 Accounts Receivable 235

134100 Interest Receivable - Loans 150

135000 Loans Receivable 200

139900 Allowance for Subsidy 425

155100 Foreclosed Property 25

251000 Principal Payable to the Bureau of the Fiscal Service 700

Total 1125 1125

Memorandum

9XAA 425

9XAB 425

Total 425 425

Closing Entries

To record the consolidation of actual net-funded resources and reductions for withdrawn funds and to record the closing of Expended 

Authority – Paid

DR CR TC

Budgetary Entry

490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed Property]

420100 Total Actual Resources Collected

 426400 Actual Collection of Rent

 426500 Actual Collections From Sale of Foreclosed Property

Proprietary Entry

130

365

 20

 475

F302
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 26 of 97 August 2017

None

To close unobligated authority

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 445000 Unapportioned Authority

Proprietary Entry

None

135

135

 

F308

Post-Closing Trial Balance

Debit Credit

Accounts

Budgetary

420100 Total Actual Resources - Collected 515

445000 Unapportioned Authority 515

Total 515 515

Proprietary

101000 Fund Balance With Treasury 515

131000 Accounts Receivable 235
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 27 of 97 August 2017

134100 Interest Receivable - Loans 150

135000 Loans Receivable 200

139900 Allowance for Subsidy 425

155100 Foreclosed Property 25

251000 Principal Payable to the Bureau of the Fiscal Service 700

Total 1125 1125

Memorandum

9XAA 425

9XAB 425

Total 425 425

Financial Statements

The Statement of Net Cost and the Statement of Changes in Net Position are not presented because the balances are zero.

BALANCE SHEET

Total

Assets

Intragovernmental

1. Fund Balance with Treasury (101000E) 515

6. Total Intragovernmental (This line is calculated. Equals the sum of lines 1 through 5.) 515
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 28 of 97 August 2017

9. Accounts receivable, net (131000E, 134100E) 385

11. Direct Loan and Loan Guarantees, net (135000E, 139900E, 155100E,) (200)

15. Total Assets (This line is calculated. Equals the sum of lines 6 through 14.) 700

Liabilities

17. Accounts Payable (251000E) 700

28. Total Liabilities (This line is calculated. Equals the sum of lines 20 through 27.) 700

Net Position:

30. Unexpended Appropriations (310100E) 0

33. Cumulative Results of Operations - All Other Funds (331000E) 0

35. Total Net Position – All Other Funds (calc.) 0

37. Total Liabilities and Net Position (calc.) 700

STATEMENT OF BUDGETARY RESOURCES

Total

Budgetary resources:

1000 Unobligated balance brought forward, Oct 1 (420100B) 150

1890 Spending authority from offsetting collections (discretionary and mandatory) ((426400E24, 426500E25) 495

1910 Total budgetary resources 645

24 From rent.

25 From sale of foreclosed property.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 29 of 97 August 2017

Status of budgetary resources

2190 New obligations and upward adjustments (total) (490200E) 130

Unobligated balance, end of year:

2204 Apportioned, unexpired account (461000E) 135

2413 Expired unobligated balance, end of year (445000E) 380

2490 Unobligated balance, end of year (total) (This line is calculated. Equals the sum of lines 2204 and 2413.) 515

2500 Total budgetary resources (This line is calculated. Equals the sum of lines 2190 and 2490.) 645

Change in obligated balance:

3020 Outlays (gross) (-) (490200E) 130

3200 Obligated balance, end of year (+ or -) 130

4176 Actual offsetting collections (discretionary and mandatory) (426400E, 426500E) (495)

Budget authority and outlays, net:

4190 Outlays, net (total) (discretionary and mandatory) (365)

SF 133: Report on Budget Execution and Budgetary Resources &

Schedule P Budget Program and Financing Schedule

ACTUAL COLUMN FOR YEAR 1 REPORTING

SF133 Line Sch P Line

BUDGETARY RESOURCES

All accounts:

0900 Total new obligations (490200E) 130

Unobligated balance:

1000 Unobligated balance brought forward, October 1 (420100B) 150 150
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 30 of 97 August 2017

2190 New obligations and upward adjustments (total) (130)

2201 Available in the current period (451000E, 461000E) 515

CHANGE IN OBLIGATED BALANCE

Unpaid obligations:

3010 New obligations, unexpired accounts 0 0

3020 Outlays (gross) (490200E) 130 130

BUDGET AUTHORITY AND OUTLAYS, NET

Discretionary:

Gross budget authority and outlays:

4011 Outlays from discretionary balances (490200E) 130 130

4020 Outlays , gross (total) (490200E) 130 130

4070 Budget authority, net (discretionary) 0 0

4080 Outlays, net (discretionary) 130 130

Note 8: Credit Program Note

Present Value of Loan Assets

C. Direct Loans Obligated After FY 199126:

 Loans Receivable, Gross (135000) 200

 Interest Receivable (134100) 150

 Foreclosed Property27 (155100) 25

26If these loan assets were related to defaulted guaranteed loans, the heading would instead be “Loan Assets Related to Loan Guarantees Obligated After September 30, 1991.”

27Note that there are requirements to disclose narrative information in addition to the dollar amount of foreclosed property. (See OMB Circular No. A-136 , (pp. 94-95).
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 31 of 97 August 2017

 Allowance for Subsidy Cost (Present Value) (139900 (190)

 Value of Assets Related to Direct Loans, Net 185

 

 

Note 8: Credit Program Note

Schedule for Reconciling Subsidy Cost Allowance Balances28

Beginning balance of the subsidy cost allowance (9XAAB) (425)

Adjustments:

(c) Foreclosed property acquired (9XAC) 235 

Ending balance of the subsidy cost allowance (should = 9XAAE) (190) 

Scenario 2: Foreclosed Property Taken Without Recourse–Post-Credit Reform

The scenario presents transactions, interim and year-end trial balances, and year-end reports relating to fiscal year X. If no entries 

appear in a category of accounts (budgetary, proprietary, memorandum) for a transaction, no entries are required in the category.

The agency had the following financing fund account balances at the beginning of fiscal year X:

28Note that there is no requirement for a schedule for the allowance for subsidy related to defaulted guaranteed loan assets.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 32 of 97 August 2017

Beginning Trial Balance

Debit Credit

Accounts

Budgetary

420100 Total Actual Resources - Collected29 150

445000 Unapportioned Authority 150

Total 0 0

Proprietary

101000 Fund Balance With Treasury 150

134100 Interest Receivable [Direct Loans] 650

135000 Loans Receivable [Direct] 300

139900 Allowance for Subsidy [Direct Loans Receivable] 425

155100 Foreclosed Property [Direct Loans] 25

251000 Principal Payable to the Bureau of the Fiscal Service 700

Total 1,125 1,125

Beginning Trial Balance

Memorandum

9XAA Allowance for Subsidy - Beginning Balance $425

9XAB Allowance for Subsidy - Contra $425

Total 0 0

29Normally, a direct loan program uses its collections to repay its debt and interest to Treasury, and, therefore, does not have a cash balance. However, an agency may retain cash 

from collections if it needs to use the cash before it receives additional collections. If the agency has no available cash and it needs to make payments, it would have to borrow 

from Treasury. In this guide, the agency is assumed to have foreseen the need to make payments related to foreclosed property before any collections become available. If there 

was no available cash, and payments needed to be made, the agency would have to borrow from Treasury. 
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 33 of 97 August 2017

2-1. The agency estimated that $100 of direct loans and $500 of interest receivable would default, and that the collateral property 

involved would be foreclosed on. The agency further estimated that it would receive collections of $95 from sales and $20 from rental 

of the foreclosed property. No transactions related to the existing foreclosed property at the beginning of the year were expected. 

OMB apportioned the maximum amount, and the agency followed standard procedure in providing for blanket allotment of 

anticipated collections as they are realized. The agency allotted the full allowable apportionment at the beginning of the year.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 34 of 97 August 2017

To request an apportionment from OMB

DR CR TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 445000 Unapportioned Authority

Proprietary Entry

None

115

115

 

A140

To record the OMB apportionment

DR CR TC

Budgetary Entry

445000 Unapportioned Authority

 451000 Apportionments

 459000 Apportionments Unavailable - Anticipated Resources

Proprietary Entry

None

265

150

 115 

A118

A140

To record allotment of the realized resources

DR CR TC

Budgetary Entry

451000 Apportionments

 461000 Allotments - Realized Resources30

150

150 A120

30Note that in accordance with OMB guidance, agencies can allot only the realized resources, those in the Unobligated balance forward (as represented by the beginning balance of 

account 4450). They cannot obligate anticipated resources until the resources are realized.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 35 of 97 August 2017

Proprietary Entry

None

 

2-2. $100 of direct loans and $500 of interest receivable defaulted. The fair market value of the property received was estimated to be 

$450. It came with a lien of $40,31 which was paid.32 The loan terms provided that the foreclosed property was taken without 

recourse.

31Although collateral property should be free of liens when the Government foreclosed on it, creditors may have placed liens on the property, such as for an unpaid contractor’s 

lien or for unpaid property taxes.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 36 of 97 August 2017

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans]

139900 Allowance for Subsidy [Direct Loans]33

 134100 Interest Receivable [Direct Loans]

 135000 Loans Receivable [Direct]

 101000 Fund Balance With Treasury

Memorandum Entry

9XAC Allowance for Subsidy - Adj – Foreclosed Property Gain/Loss

9XAB Allowance for Subsidy - Contra

40

 

 450

 190

 

 190

40

 

 500

100

 40

190

B116

2-3. The agency paid $60 to repair the new foreclosed property.

32If the agency paid the lien in a separate transaction from acquisition of the property, it makes a budgetary entry to credit account 490100 for $40 instead of 490200[Payments on 

Foreclosed Property], for $40, and the proprietary entry would be changed as follows: Debit 155100 $410, 139900 $190, and 119000 $40 Credit 134000 $500, 135000 $100, and 

211000 $40.

Upon payment, the agency makes the budgetary entry (dr./cr.) 490100/490200[Payments on Foreclosed Property], and the following proprietary entries: 155100/199000 and 

211000/101000. With few exceptions, an agency may not debit or credit account 155100 unless cash has been transacted. Finally, if at the end of the year, a lien is still unpaid, 

the entry debiting account 199000 and crediting account 211000 would be reversed in the process of consolidation to avoid double-counting between the unpaid lien and the 

foreclosed property’s present value, which already contains the present value of the lien payment to be made.

33Note that because the collateral property is taken without recourse, the agency must remove the loan and interest receivable from its books, since it must consider acceptance of 

the foreclosed property as payment in full for the loan. The agency charges the difference between the fair market value of the property and the gross value of the receivables to 

account 139900[Direct Loans Receivable]. If the fair market value of the property is greater than the gross value of the receivables, the agency credits account 139900 [Direct 

Loans Receivable].
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 37 of 97 August 2017

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans] ]

34

 101000 Fund Balance With Treasury

60

 

 60

60

 

60

B116

2-4. The agency rented the new property to a third party, and collected $20 for the rent. 

To realize the resource

DR CR TC

Budgetary Entry

426400 Actual Collections of Rent

 406000 Anticipated Collections From Non-Federal Sources

20

20

34A payment made on foreclosed property by the foreclosing agency increases the net present value of the property because, once made, the succeeding payments are less 

(remember that net present value of an asset equals the present value of cash receipts less the present value of cash payments). In theory, the agency can recognize this via a debit 

to account 139900[Direct Loans Receivable] or 155100[Direct Loans], either of which will provide the requisite increase. However, in a “with recourse” foreclosure, agencies 

must determine whether there is a net cash inflow or outflow related to the foreclosed property after sale so they can collect cash owed from the borrower or refund excess cash to 

the borrower. Additionally, agencies are often asked to report to OMB or the Congress on the results of their foreclosed property program. Agencies may consider using a 

subsidiary ledger for foreclosed property that show the cashflows by property since good property management requires a subsidiary record of information to detail the balance in 

account 155100[Direct Loans]. Accordingly, the cash flows related to property in this guide will be made to account 155100[Direct Loans] rather than to account 139900[Direct 

Loans Receivable]. Note, too, that it makes no difference to the accounting treatment whether the payment is for major or for minor repairs, as it might in commercial sector 

accounting.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 38 of 97 August 2017

Proprietary Entry

1010 Fund Balance With Treasury

 1551 Foreclosed Property [Direct Loans] 35

20

 

 

20

C109

To allot the realized resource

DR CR TC

Budgetary Entry

459000 Apportionments Unavailable - Anticipated Resources

 461000 Allotments - Realized Resources

Proprietary Entry

None

20

 

20

 A122

2-5. The agency paid expenses of $30 related to rental of the new property.

To record payment

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources 30

35Note that the credit is to account 1551[Direct Loans] instead of account 1399[Direct Loans Receivable]. See the preceding note. (This caveat is not repeated in subsequent 

transactions involving debits or credits to account 1551[Direct Loans] instead of account 1399[Direct Loans Receivable].)
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 39 of 97 August 2017

 490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans]

 101000 Fund Balance With Treasury

 30

30

 

30

B116

2-6. The agency sold the new property, which at this point is on the books at a gross value of $520, for $475, net of expenses of sale.

To realize the resource

DR CR TC

Budgetary Entry
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 40 of 97 August 2017

426500 Actual Collections From Sale of Foreclosed Property36

 406000 Anticipated Collections From Non-Federal Sources37

Proprietary Entry

1010 Fund Balance With Treasury

1399 Allowance for Subsidy [Direct Loans] 38

1551 Foreclosed Property [Direct Loans]

475

475

45

 

475

 

520

C109

To allot the realized resources to the extent apportioned 39

DR CR TC

Budgetary Entry

36The value of the entry is the net cash received. The Federal Budget normally would not report a collection of the gross amount and an unpaid, undelivered order for fees of sale, 

because this could complicate preparing the Statement of Budgetary Resources. The Statement of Budgetary Resources must match net obligations to net outlays and must 

compute net outlays based on transactions reported to Treasury. The agency normally reports the transaction to Treasury only as a net collection. Recording it as both a collection 

and a disbursement in the budgetary accounts is not appropriate unless the agency obtains permission from OMB, or is directed to do so by OMB or Treasury. If the amounts are 

material, provide a footnote explanation of any deviation from what was reported to Treasury for the Statement of Budgetary Resources.

37In transaction 1-1, OMB apportioned $115 related to anticipated collections. In transaction 1-4, the agency collected $20 for rent, leaving a balance of $95. The excess of 

collections over the anticipated amount is unapportioned unless the agency applies for a re-apportionment and OMB grants it. Therefore, the agency cannot allot the excess. Some 

agencies may handle this by allowing account 4060 to become negative, and then making an adjusting entry at year-end to move the amount in account 4060 to account 4450, as 

indicated in this guide. An agency may also choose to record the anticipated amount remaining in account 4060 and the excess over the amount anticipated, which is 

unapportioned, into account 4450. For example, debit account 4265 for $475, credit account 4060 for $95, and credit account 4450 for $380. As a result, a closing entry for 

accounts 4060 and 4450 would not be necessary.

38The agency charges the loss on sale against the allowance for subsidy. Note that this is different from the “with recourse” situation illustrated in Scenario 1, when the agency 

legally could collect the loss from the borrower. If there were a gain on sale, the agency would credit the allowance for subsidy.

39Ibid.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 41 of 97 August 2017

459000 Apportionments Unavailable - Anticipated Resources

 461000 Allotments - Realized Resources

Memorandum Entry40

9XAC Allowance for Subsidy - Adj - Foreclosed Property Gain/Loss

 9XAB Allowance for Subsidy - Contra

95

 45

95

 

45

A122

Pre-Closing Entry

2-7. To record adjustments for resources realized in excess of those anticipated.

DR CR TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 445000 Unapportioned Authority

Proprietary Entry

None

380

 

 

380

 

 F116

Pre-closing Trial Balance

Debit Credit

Accounts

Budgetary

40If there was a gain on sale, the agency would reverse this entry from that shown.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 42 of 97 August 2017

406000 Anticipated Collections From Non-Federal Sources 0

420100 Total Actual Resources - Collected 150

426400 Actual Collections of Rent 20

426500 Actual Collections From Sale of Foreclosed Property 475

445000 Unapportioned Authority 380

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment 0

461000 Allotments - Realized Resources 135

490200 Delivered Orders - Obligations, Paid 130

Total 645 645

Proprietary

101000 Fund Balance With Treasury 515

134100 Interest Receivable - Loans 150

135000 Loans Receivable 200

139900 Allowance for Subsidy 190

155100 Foreclosed Property 25

251000 Principal Payable to the Bureau of the Fiscal Service 700

Total 890 890

Memorandum

9XAA 425

9XAB 190

9XAC 235

Total 425 425

Closing Entries

To record the consolidation of actual net-funded resources and reductions for 

withdrawn funds and to record the closing of Expended Authority – Paid.

DR CR TC

Budgetary Entry
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 43 of 97 August 2017

490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed Property]

420100 Total Actual Resources Collected

 426400 Actual Collections of Rent

 426500 Actual Collections From Sale of Foreclosed Property

Proprietary Entry

None

130

365

 

 

20

475

 

 

 

 F302

 F314?

To close unobligated authority

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 445000 Unapportioned Authority

Proprietary Entry

None

Memorandum Entry

9XAA Allowance for Subsidy

 9XAC Allowance for Subsidy - Adj - Foreclosed Property Gain/Loss

135

 

 

 235

135

 

235

 

 F308

Post-Closing Trial Balance

Debit Credit

Accounts

Budgetary

420100 Total Actual Resources - Collected $515
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 44 of 97 August 2017

445000 Unapportioned Authority $515

Total 515 515

Proprietary

101000 Fund Balance With Treasury 515

134100 Interest Receivable - Loans 150

135000 Loans Receivable 200

139900 Allowance for Subsidy 190

155100 Foreclosed Property 25

251000 Principal Payable to the Bureau of the Fiscal Service 700

Total 890 890

Memorandum

9XAA 190

9XAB 190

Total 0

Financial Statements

The Statement of Net Cost and the Statement of Changes in Net Position are not presented because the balances are zero.

BALANCE SHEET
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 45 of 97 August 2017

Total

Assets

Intragovernmental

1. Fund Balance with Treasury (101000E) 515

6. Total Intragovernmental (This line is calculated. Equals the sum of lines 1 through 5.) 515

9. Accounts receivable, net (131000E, 134100E) 385

11. Direct Loan and Loan Guarantees, net 135000,139900E, 155100E,) (200)

15. Total Assets (This line is calculated. Equals the sum of lines 6 through 14.) 700

Liabilities

28. Total Liabilities (This line is calculated. Equals the sum of lines 20 through 27.)) 0

Net Position:

30. Unexpended Appropriations (310100E) 0

33. Cumulative Results of Operations - All Other Funds (331000E) 700

35. Total Net Position – All Other Funds (calc.) 700

37. Total Liabilities and Net Position (calc.) 700

STATEMENT OF BUDGETARY RESOURCES

(Non-budgetary Financing Fund)

Total

Budgetary resources:
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 46 of 97 August 2017

1000 Unobligated balance brought forward, Oct 1 (420100B) 150

1890 Spending authority from offsetting collections (discretionary and mandatory) ((426400E, 426500E) 495

1910 Total budgetary resources

645

Status of budgetary resources

2190 New obligations and upward adjustments (total) (490200E) 130

Unobligated balance, end of year:

2204 Apportioned, unexpired account (461000E) 135

2413 Expired unobligated balance, end of year (44500E) 380

2490 Unobligated balance, end of year (total) (This line is calculated. Equals the sum of lines 2204 and 2413.) 515

2500 Total budgetary resources (This line is calculated. Equals the som of lines 2190 and 2490) 645

Change in obligated balance:

3020 Outlays (gross) (-) (490200E) 130

3200 Obligated balance, end of year (+ or -) 130

4176 Actual offsetting collections (discretionary and mandatory) (426400E, 426500E) (495)

Budget authority and outlays, net:

4190 Outlays, net (total) (discretionary and mandatory) (365)

SF 133: Report on Budget Execution and Budgetary Resources &

Budget Program and Financing Schedule (Schedule P)

ACTUAL COLUMN FOR YEAR 1 REPORTING

SF133 Line Sch P Line
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 47 of 97 August 2017

BUDGETARY RESOURCES

All accounts:

0900 Total new obligations (490200E) 130

Unobligated balance:

1000 Unobligated balance brought forward, October 1 (420100B) 150 150

2190 New obligations and upward adjustments (total) (130)

2201 Available in the current period (451000E, 461000E) 515

CHANGE IN OBLIGATED BALANCE

Unpaid obligations:

3010 New obligations, unexpired accounts 0 0

3020 Outlays (gross) (490200E) 130 130

BUDGET AUTHORITY AND OUTLAYS, NET

Discretionary:

Gross budget authority and outlays:

4011 Outlays from discretionary balances (490200E) 130 130

4020 Outlays , gross (total) (490200E) 130 130

4070 Budget authority, net (discretionary) 0 0

4080 Outlays, net (discretionary) 130 130

Note 8: Credit Program Note

Present Value Of Loan Assets41

C. Direct Loans Obligated After \ 1991:

 Loans Receivable, Gross (135000) 200

41If these loan assets were related to defaulted guaranteed loans, the heading would instead be “Loan Assets Related to Loan Guarantees Obligated After September 30, 1991.”
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 48 of 97 August 2017

 Interest Receivable (134100) 150

 Foreclosed Property42 (155100) 25

 Allowance for Subsidy Cost (Present Value) (139900) (190)

 Value of Assets Related to Direct Loans, Net 185

Note 8: Credit Program Note43

G. Schedule for Reconciling Subsidy Cost Allowance Balances (Post -1991 

Direct Loans):

Beginning Balance October 1, Changes, and Ending Balance (9XAAB)

 (425) 

Adjustments:

 (c) Foreclosed property acquired (9XAC) 235 

Ending balance September 30 of the subsidy cost allowance (should = 9XAAE) 190 

Scenario 3: Foreclosed Property Taken With Recourse–Pre-Credit Reform

The scenario presents transactions, interim and year-end trial balances, and year-end reports relating to fiscal year X. If no entries 

appear in a category of accounts (budgetary, proprietary, memorandum) for a transaction, no entries are required in the category. 

42Note that there are requirements to disclose narrative information in addition to the dollar amount of foreclosed property. (See OMB Circular No. A-136 , (pp. 94-95).

43Note that there is no requirement for a schedule for the allowance for subsidy related to defaulted guaranteed loan assets.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 49 of 97 August 2017

The agency had the following liquidating fund account balances at the beginning of fiscal year X:

Beginning Trial Balance

Debit Credit

Accounts

Budgetary 150

420100 Total Actual Resources - Collected 150

445000 Unapportioned Authority

Total 0 0

Proprietary 150

101000 Fund Balance With Treasury 650

134100 Interest Receivable [Direct Loans] 300

134500- Allowance for Loss on Interest Receivable- Loans[Direct Loans] 320

135000 Loans Receivable [Direct] 300

135900 Allowance for Loss on Loans Receivable [Direct] 100

155100 Foreclosed Property [Direct Loans] 25

155900 Foreclosed Property – Allowance [Direct Loans] 5

331000 Cumulative Results of Operations 700

Total 1,125 1,125

3-1. The agency estimated that $100 of direct loans and $500 of interest receivable would default, and that the collateral property 

involved would be foreclosed on. The agency further estimated that it would receive collections of $95 from sales and $20 from rental 

of the foreclosed property. No transactions related to the existing foreclosed property at the beginning of the year were expected. 

OMB apportioned the maximum amount, and the agency followed standard procedure in providing for blanket allotment of 

anticipated collections as they are realized. The agency allotted full allowable apportionment at the beginning of the year.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 50 of 97 August 2017

To request an apportionment from OMB

DR CR TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 445000 Unapportioned Authority

Proprietary Entry

None

140

140

 

A140

To record the OMB apportionment

DR CR TC

Budgetary Entry

445000 Unapportioned Authority

 451000 Apportionments

 459000 Apportionments Unavailable - Anticipated Resources

Proprietary Entry

None

265

150

 115 

A118

A140

To record allotment of the realized resources

DR CR TC

Budgetary Entry
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 51 of 97 August 2017

451000 Apportionments

 461000 Allotments - Realized Resources44

Proprietary Entry

None

150

150

 

A120

3-2. $100 of direct loans and $500 of interest receivable defaulted. The fair market value of the property received was estimated to be 

$450. It came with a lien of $40, which was paid.45 The loan terms provided that the foreclosed property was taken with recourse.

44Note that in accordance with OMB guidance, agencies can allot only the realized resources, those in the unobligated balance forward (as represented by the beginning balance of 

account 445000). They cannot obligate anticipated resources until the resources are realized (in accordance with §145.6 of OMB Circular A-11, only realized resources may be 

obligated). 
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 52 of 97 August 2017

To record payment

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans]

 134100 Interest Receivable [Direct Loans] 46

 101000 Fund Balance With Treasury

40

 450

40

 

410

40

B116

C162

3-3. The agency paid $60 to repair the new foreclosed property.

45Although collateral property should be free of liens when the Government forecloses on it, creditors may have placed liens, such as for an unpaid contractor’s lien or for unpaid 

property taxes.

If agency paid the lien in a separate transaction from acquisition of the property, it makes a the budgetary entry to account 490100 instead of account 490200[Payments on 

Foreclosed Property], and in accordance with SFFAS No. 3, Accounting for Inventory and Related Property, par. 87. In the proprietary the agency replaces account 101000 with 

account 155900[Direct Loans]. Upon payment, the agency debits account 490100 and credits account 490200[Payments on Foreclosed Property]; it debits accounts 155900[Direct 

Loans] and credits account 101000. 

46Note that the borrower is given credit for the net inflow of assets. The fair market value of the collateral property, reduced by the lien, in lieu of a cash collection. If the net fair 

market value is greater than the interest, but less than the sum of the principal and interest, the agency credits account 135000[Direct] for the difference between the amount of the 

interest receivable and the net fair market value. If the net amount is $510, then the agency credits account 134100[Direct Loan] for $500 and account 135000[Direct] for $10). If 

the net fair market value is greater than both principal and interest, the agency credits the amount in excess of accounts 134100[Direct Loans] and 135000[Direct] to a combination 

of account 134900[Direct Loan] and account 135900[Direct], as determined by the agency. If, for example, the net fair market value of the foreclosed property is $625, the agency 

credits account 134100[Direct Loans] for $500, account 135000 [Direct] for $100, and account 134900[Direct Loan] and account 135900[Direct] for a total of $25. Per SFFAS 

No. 3, Accounting for Inventory and Related Property, par. 87, this reporting follows the normal practice of crediting amounts first to late charges and penalties receivable (there 

are none in this case), then to interest receivable, then to loans receivable, and finally to the allowance accounts. If the loan contract specifies otherwise, then some other 

distribution consistent with the contract requirements would have to be made. Normally, an agency would recognize a gain on foreclosed property, since the agency would have to 

repay any such gain, if it materialized after all transactions with the fixed property were recorded to the borrower.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 53 of 97 August 2017

To record payment

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans]47

 101000 Fund Balance With Treasury

60

60

 

60

 

60

B116

3-4. The agency rented the new property to a third party, and collected $20 for the rent.

To realize the resource

DR CR TC

Budgetary Entry

426400 Actual Collections of Rent

 406000 Anticipated Collections From Non-Federal Sources

Proprietary Entry

101000 Fund Balance With Treasury

 155100 Foreclosed Property [Direct Loans]

20

20

 

20

 

20

C109

47Agencies must determine whether there is a net cash inflow or outflow related to a piece of foreclosed property after sale in a “with recourse” foreclosure, so they can collect 

cash owed from the borrower or refund excess cash to the borrower. Additionally, agencies are often asked to report to OMB or the Congress on the results of their foreclosed 

property program. Accordingly, the agencies may consider using a subsidiary ledger for foreclosed property that shows the cash flows by property, since good property 

management requires a subsidy record of information to detail the balance in account 155100[Direct Loan]. Note, too, that it makes no difference to the accounting treatment 

whether the payment is for major or for minor repairs, as it might in commercial sector accounting.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 54 of 97 August 2017

To allot the realized resource

DR CR TC

Budgetary Entry

459000 Apportionments Unavailable - Anticipated Resources

 461000 Allotments - Realized Resources

Proprietary Entry

None

20

 

20

 A122

3-5. The agency paid expenses of $30 related to rental of the new property.

To record payment

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders – Obligations, Paid [Payments for Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans]

 101000 Fund Balance With Treasury

30

 30

 

30

 

30

B116
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 55 of 97 August 2017

3-6. The agency sold the new property, which at this point is on the books at a gross value of $520, for $475, net of expenses of sale.

48

To realize the resource

DR CR TC

Budgetary Entry

426500 Actual Collections From Sale of Foreclosed Property49

 406000 Anticipated Collections From Non-Federal Sources50

Proprietary Entry

101000 Fund Balance With Treasury

131000 Accounts Receivable [From Borrowers Upon Sale of Foreclosed 

Property] 51

 134100 Interest Receivable [Direct Loans]

475

 475

 235

 

475

 

90

C109 

48See transactions 1-6a and 1-6b in Scenario 1 for an example of how to handle the transaction if the sale yielded more cash than necessary to satisfy the borrower’s debt.

49The value of the entry is the net cash received. The Federal Budget normally would not report a collection of the gross amount and an unpaid, undelivered order for fees of sale, 

because this could complicate preparing the Statement of Budgetary Resources. The Statement of Budgetary Resources must match net obligations to net outlays and must 

compute net outlays based on transactions reported to Treasury. The agency normally reports the transaction to Treasury only as a net collection. Recording it as both a collection 

and a disbursement in the budgetary accounts is not appropriate unless the agency obtains permission from OMB, or is directed to do so by OMB or Treasury. If the amounts are 

material, provide a footnote explanation of any deviation from what was reported to Treasury for the Statement of Budgetary Resources.

50In transaction 1-1, OMB apportioned $115 related to anticipated collections. In transaction 1-4, the agency collected $20 for rent, leaving a balance of $95. The excess of 

collections over the anticipated amount is unapportioned unless the agency applies for a re-apportionment and OMB grants it. As a result, the agency cannot allot the excess. 

Some agencies may handle this by allowing account 406000 to become negative, and then making an adjusting entry at year-end to move the amount in account 406000 to account 

445000, as indicated in this guide. An agency may also choose to record the anticipated amount remaining in account 406000 and the excess over the amount anticipated, which is 

unapportioned, into account 445000. For example, debit account 426500 for $475, credit account 406000 for $95, and credit account 445000 for $380. As a result, a closing entry 

for accounts 406000 and 445000 would not be necessary.

51Alternatively, instead of using account 131000[from Borrowers Upon Sale of Foreclosed Property], the agency could record $45 ($235 - $100 - $90) to account 135000[Direct], 

leaving account 135000[Direct Loan] (related to the new foreclosed property, that was just sold) with a balance of $145, and could make no entry to account 134100[Direct Loans] 

(related to the new foreclosed property), which would remain at $90. In other words, instead of $235 appearing in account 131000[from Borrowers Upon Sale of Foreclosed 

Property] in the trial balance, the debit would be split between account 134100[Direct Loans, $90, and account 135000[Direct], $145 (as it relates to the new foreclosed property). 

Regardless of the method used, agencies must report all receivables related to the transaction in the credit program footnote to the Balance Sheet. Of course, the agency may writeoff the receivables against accounts 134900[Direct Loan] and 135900[Direct] (or accounts 134900[Direct Loan] and 135900[Direct], if related to defaulted guaranteed loans).
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 56 of 97 August 2017

 135000 Loans Receivable [Direct]

 155100 Foreclosed Property [Direct Loans]

100

520

To allot the realized resources to the extent apportioned52

DR CR TC

Budgetary Entry

459000 Apportionments Unavailable - Anticipated Resources

 461000 Allotments - Realized Resources

Proprietary Entry

None

95

 

 

95

 A122

Pre-Closing Entry

3-7. To record adjustments for resources realized in excess of those anticipated. 

To allot the realized resources to the extent apportioned

DR CR TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 445000 Unapportioned Authority

Proprietary Entry

None

380

 

 

380

 

 F116

52Ibid.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 57 of 97 August 2017

Pre-closing Trial Balance

Debit Credit

Accounts

Budgetary

406000 Anticipated Collections From Non-Federal Sources 0

420100 Total Actual Resources - Collected 150

426400 Actual Collections of Rent 20

426500 Actual Collections From Sale of Foreclosed Property 475

445000 Unapportioned Authority 380

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment 0

461000 Allotments - Realized Resources 135

490200 Delivered Orders - Obligations, Paid 130

Total 645 645

Proprietary

101000 Fund Balance With Treasury 515

131000 Accounts Receivable 235

134100 Interest Receivable - Loans 150

135000 Loans Receivable 200

134500 Allowance for Loss on Interest Receivable - Loans [Direct Loan] 32053

135900 Allowance for Loss on Loans Receivable [Direct] 100

155100 Foreclosed Property 25

155900 Foreclosed Property-Allowance 5

331000 Cumulative Results of Operations 700

Total 1125 1125

53The allowance for loss here is greater than the value of the receivable to which it applies. The agency would remedy this situation in the process of year-end adjustments for bad 

debts expense, by recomputing the amount of expected losses on the receivables remaining at that time. Because the adjustment is not a transaction involving foreclosed property, 

it is not illustrated in the guide and the allowance accounts remain as they were after the foreclosed property transactions. See the separate guide on Pre-Credit Reform accounting 

for an example of the adjusting entry for bad debts expense.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 58 of 97 August 2017

Closing Entries

To record the consolidation of actual net-funded resources and reductions for 

withdrawn funds and to record the closing of Expended Authority – Paid.

DR CR TC

Budgetary Entry

490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed Property]

420100 Total Actual Resources Collected

 426400 Actual Collections of Rent

 426500 Actual Collections From Sale of Foreclosed Property

Proprietary Entry

None

130

365

 

 

20

475

 

 

 

 F302

 F314

To close unobligated authority

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 445000 Unapportioned Authority

Proprietary Entry

None

135

 

 

135

 

 

 F308
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 59 of 97 August 2017

Post-Closing Trial Balance

Debit Credit

Accounts

Budgetary

420100 Total Actual Resources - Collected $515

445000 Unapportioned Authority $515

Total 515 515

Proprietary

101000 Fund Balance With Treasury 515

131000 Accounts Receivable 235

134100 Interest Receivable - Loans 150

13500 Allowance for Loss on Interest Receivable- Loans[Direct Loans] 320

135000 Loans Receivable 200

135900 Allowance for Loss on Loans Receivable $100

155100 Foreclosed Property 25

155900 Foreclosed Property - Allowance $5

331000 Cumulative Results of Operations $700

Total 1125 1125
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 60 of 97 August 2017

Financial Statements

The Statement of Net Cost is not presented because the balance is zero.

BALANCE SHEET

Total

Assets

Intragovernmental

1. Fund Balance with Treasury (101000E) 515

6. Total Intragovernental (This line is calculated. Equals the sum of lines 1 through 5.) 515

9. Accounts receivable, net (131000E, 134100E) 385

11. Direct Loan and Loan Guarantees, net 135000,139900E, 155100E,) (200)

15. Total Assets (This line is calculated. Equals the sum of lines 6 through 14.) 700

Liabilities

28. Total Liabilities (This line is calculated. Equals the sum of lines 20 through 27.)) 0

Net Position:

30. Unexpended Appropriations (310100E) 0

33. Cumulative Results of Operations - All Other Funds (331000E) 700

35. Total Net Position – All Other Funds (calc.) 700

37. Total Liabilities and Net Position (calc.) 700
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 61 of 97 August 2017

STATEMENT OF CHANGES IN NET POSITION

Cumulative Results from Operations:

1. Beginning Balances

Cumulative Results of Operations (331000B) 700

3. Beginning balance, as adjusted (This line is calculated. Equals sum of lines 1 through 2B) 700

16. Net Change (This line is calculated. Equals sum of lines 14 minus 15.) 0

17. Cumulative Results of Operations (This line is calculated. Equals sum of lines 3 and 16.)) 700

27. Net Position (This line is calculated. Equals sum of lines 17 and 26.) 700
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 62 of 97 August 2017

STATEMENT OF BUDGETARY RESOURCES

(Non-budgetary Financing Fund)

Total

Budgetary resources:

1000 Unobligated balance brought forward, Oct 1 (420100B) 150

1890 Spending authority from offsetting collections (discretionary and mandatory) ((426400E, 426500E) 495

1910 Total budgetary resources

645

Status of budgetary resources

2190 New obligations and upward adjustments (total) (490200E) 130

Unobligated balance, end of year:

2204 Apportioned, unexpired account (461000E) 135

2413 Expired unobligated balance, end of year (44500E) 380

2490 Unobligated balance, end of year (total) (This line is calculated. Equals the sum of lines 2204 and 2413.) 515

2500 Total budgetary resources (This line is calculated. Equals the sum of lines 2190 and 2490) 645

Change in obligated balance:

3020 Outlays (gross) (-) (490200E) 130

3200 Obligated balance, end of year (+ or -) 130

4176 Actual offsetting collections (discretionary and mandatory) (426400E, 426500E) (495)

Budget authority and outlays, net:

4190 Outlays, net (total) (discretionary and mandatory) (365)
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 63 of 97 August 2017

SF 133: Report on Budget Execution and Budgetary Resources &

Budget Program and Financing Schedule (Schedule P)

ACTUAL COLUMN FOR YEAR 1 REPORTING

SF133 Line Sch P Line

BUDGETARY RESOURCES

All accounts:

0900 Total new obligations (490200E) 130

Unobligated balance:

1000 Unobligated balance brought forward, October 1 (420100B) 150 150

2190 New obligations and upward adjustments (total) (130)

2201 Available in the current period (451000E, 461000E) 515

CHANGE IN OBLIGATED BALANCE

Unpaid obligations:

3010 New obligations, unexpired accounts 0 0

3020 Outlays (gross) (490200E) 130 130

BUDGET AUTHORITY AND OUTLAYS, NET

Discretionary:

Gross budget authority and outlays:

4011 Outlays from discretionary balances (490200E) 130 130

4020 Outlays , gross (total) (490200E) 130 130

4070 Budget authority, net (discretionary) 0 0

4080 Outlays, net (discretionary) 130 130
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 64 of 97 August 2017

Note 8: Credit Program Note

Present Value Of Loan Assets

C. Direct Loans Obligated After \ 1991:54

 Loans Receivable, Gross (135000) 200

 Interest Receivable (134100) 150

 Foreclosed Property55 (155100) 25

 Allowance for Subsidy Cost (Present Value) (139900) (190)

 Value of Assets Related to Direct Loans, Net 185

Note 8: Credit Program Note

G. Schedule for Reconciling Subsidy Cost Allowance Balances (Post -1991 

Direct Loans): 56

Beginning Balance October 1, Changes, and Ending Balance (9XAAB)

 (425) 

Adjustments:

 (c) Foreclosed property acquired (9XAC) 235 

Ending balance September 30 of the subsidy cost allowance (should = 9XAAE) 190 

54If these loan assets were related to defaulted guaranteed loans, the heading would instead be “Loan Assets Related to Loan Guarantees Obligated After September 30, 1991.”

55Note that there are requirements to disclose narrative information in addition to the dollar amount of foreclosed property. (See OMB Circular No. A-136 , (pp. 94-95).

56Note that there is no requirement for a schedule for the allowance for subsidy related to defaulted guaranteed loan assets.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 65 of 97 August 2017

Scenario 4: Foreclosed Property Taken Without Recourse–Pre-Credit Reform

The scenario presents transactions, interim and year-end trial balances, and year-end reports relating to fiscal year X. If no entries 

appear in a category of accounts (budgetary, proprietary) for a transaction, no entries are required in the category.

The agency had the following liquidating fund account balances at the beginning of fiscal year X:

Beginning Trial Balance

Debit Credit

Accounts

Budgetary

420100 Total Actual Resources - Collected 150

445000 Unapportioned Authority 150

Total 150 150

Proprietary

101000 Fund Balance With Treasury 150

134100 Interest Receivable [Direct Loans] 650

135000 Loans Receivable [Direct]

13500 Allowance for Loss on Interest Receivable - Loans [Direct Loan] 320

135000 Loans Receivable [Direct] 300

155100 Foreclosed Property [Direct Loans] 25

155900 Foreclosed Property - Allowance [Direct Loans Receivable] 5

331000 Cumulative Results of Operations 700

Total 1,125 1,125
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 66 of 97 August 2017

4-1. The agency estimated that $100 of direct loans and $500 of interest receivable would default, and that the collateral property 

involved would be foreclosed on. The agency further estimated that it would receive collections of $95 from sales and $20 from rental 

of the foreclosed property. No transactions related to the existing foreclosed property at the beginning of the year were expected. 

OMB apportioned the maximum amount, and the agency followed standard procedure in providing for blanket allotment of 

anticipated collections as they are realized. The agency allotted the full allowable apportionment at the beginning of the year.

To request an apportionment from OMB

DR CR TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 445000 Unapportioned Authority

Proprietary Entry

None

115

 

 

115

 

 A140

To record the OMB apportionment

DR CR TC

Budgetary Entry

445000 Unapportioned Authority

 451000 Apportionments

 459000 Apportionments Unavailable - Anticipated Resources

Proprietary Entry

None

265

 

 

150

115

 

 A116

 A118
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 67 of 97 August 2017

To record allotment of the realized resources

DR CR TC

Budgetary Entry

451000 Apportionments

 461000 Allotments - Realized Resources57

Proprietary Entry

None

150

 

 

150

 

 A120

57Note that in accordance with OMB guidance, agencies can allot only the realized resources, those in the unobligated balance forward (as represented by the beginning balance of 

account 445000). They cannot obligate anticipated resources until the resources are realized. (in accordance with §145.6 of OMB Circular A-11, only realized resources may be 

obligated).
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 68 of 97 August 2017

4-2. $100 of direct loans and $500 of interest receivable defaulted. The fair market value of the property received was estimated to be 

$450. It came with a lien of $40, which was paid.58 The loan terms provided that the foreclosed property was taken without recourse.

To record payment

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Direct Loans]

721000 Losses on Disposition of Assets - Other59

 134100 Interest Receivable [Direct Loans]

 135000 Loans Receivable [Direct]

 101000 Fund Balance With Treasury

40

 450

 190

40

 

 500

 100

 40

 

 B116

58Although collateral property is supposed to be free of liens when the Government forecloses on it, creditors may have placed liens on the property, such as for an unpaid 

contractor’s lien or for unpaid property taxes.

If the agency paid the lien in a separate transaction from acquisition of the property, it makes a budgetary to account 490100 instead of account 490200[Payments on Foreclosed 

Property], and in accordance with SFFAS No. 3, Accounting for Inventory and Related Property, par. 87. In the proprietary entry, the agency replaces account 101000 with 

account 155900[Direct Loans]. Upon payment, the agency debits account 490100and credits account 490200[Payments on Foreclosed Property]; it debits account 155900[Direct 

Loans] and credits account 101000.

59Note that because the collateral property is taken without recourse, the loan and interest receivable must be removed from the books, since the agency must consider acceptance 

of the foreclosed property as payment in full for the loan. The agency charges the difference between the fair market value of the property and the gross value of the receivables to 

account 721000. If the fair market value of the property is greater than the gross value of the receivables, the agency credits account 711000. The agency also may remove the 

related allowance for loss accounts (134900[Direct Loan] and 135900[Direct]), if it knows the amounts related to the loan and interest for which the collateral property was 

foreclosed. If the agency does this, it decreases the amount of the loss or increases the amount of a gain commensurately. Alternatively, the allowance for loss accounts could be 

left alone until the year-end adjustment process to estimate bad debts expense, at which time the agency would adjust the amounts in accounts 134900 and 135900 to reflect the 

latest estimate relative to any loans and interest receivable still on the books at year-end. This guide illustrates the latter.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 69 of 97 August 2017

4-3. The agency paid $60 to repair the new foreclosed property.

To record payment

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 490200 Delivered Orders – Obligations, Paid [Payments for Foreclosed 

Property]

Proprietary Entry

155100 Foreclosed Property [Related to Direct Loans]

 101000 Fund Balance With Treasury

10

 

 10

10

 

 10

 B116
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 70 of 97 August 2017

4-6. The agency sold the new property, which at this point is on the books at a gross value of $520, for $475, net of expenses of sale.

60

To realize the resource

DR CR TC

Budgetary Entry

426500 Actual Collections From Sale of Foreclosed Property61

406000 Anticipated Collections From Non-Federal Sources62

Proprietary Entry

101000 Fund Balance With Treasury

721000 Losses on Dispositions of Assets

 155100 Foreclosed Property [Direct Loans]

475

 475

 45

475

 

 520 

 

C109

C628

60See entries 1-6a and 1-6b for Scenario 1 for an example of how the transaction would be handled if the sale yielded more cash than necessary to satisfy the borrower’s debt.

61The value of the entry is the net cash received. The Federal Budget normally would not report a collection of the gross amount and an unpaid, undelivered order for fees of sale, 

because this could unduly complicate preparing the Statement of Budgetary Resources. The Statement of Budgetary Resources must match net obligations to net outlays and must 

compute net outlays based on transactions reported to Treasury. The agency normally reports the transaction to Treasury only as a net collection, and recording it as both a 

collection and a disbursement in the budgetary accounts is not appropriate unless the agency obtains permission from OMB, or is directed to do so by OMB or Treasury. If the 

amounts are material, provide a footnote explanation of any deviation from what was reported to Treasury for the Statement of Budgetary Resources.

62In transaction 1-1, OMB apportioned $115 related to anticipated collections. In transaction 1-4, the agency collected $20 for rent, leaving a balance of $95. The excess of 

collections over the anticipated amount is unapportioned unless the agency applies for a re-apportionment and OMB grants it. As a result, the agency cannot allot the excess. 

Some agencies may handle this by allowing account 406000 to become negative, and then making an adjusting entry at year-end to move the amount in account 406000 to account 

445000, as indicated in this guide. An agency may also choose to record the anticipated amount remaining in account 406000 and the excess over the amount anticipated, which is 

unapportioned, into account 445000. For example, debit account 426500 for $475, credit account 406000 for $95, and credit account 445000 for $380. As a result, a closing entry 

for accounts 406000 and 445000 would not be necessary.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 71 of 97 August 2017

To allot the realized resources to the extent apportioned63

DR CR TC

Budgetary Entry

459000 Apportionments Unavailable - Anticipated Resources

 461000 Allotments - Realized Resources

Proprietary Entry

None

95

 

95

 

 

 A122

Pre-Closing Entry

To record adjustments for resources realized in excess of those anticipated.

DR CR TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 445000 Unapportioned Authority

Proprietary Entry

None

380

 

380

 

 

 F116

63Ibid.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 72 of 97 August 2017

Pre-closing Trial Balance

Debit Credit

Accounts

Budgetary

406000 Anticipated Collections From Non-Federal Sources 0

420100 Total Actual Resources - Collected 150

426400 Actual Collections of Rent 20

426500 Actual Collections From Sale of Foreclosed Property 475

445000 Unapportioned Authority 380

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment 0

461000 Allotments - Realized Resources 135

490200 Delivered Orders - Obligations, Paid 130

Total 645 645

Proprietary

101000 Fund Balance With Treasury 515

134100 Interest Receivable - Loans 150

134500 Allowance for Loss on Interest Receivable - Loans[Direct Loan]64 320

135000 Loans Receivable 200

135900 Allowance for Loss on Loans Receivable 100

155100 Foreclosed Property 25

155900 Foreclosed Property - Allowance 5

331000 Cumulative Results of Operations 700

721000 Losses on Disposition of Assets - Other 235

Total 1125 1125

64The allowance for loss is greater than the value of the receivable to which it applies. The agency would remedy this during year-end adjustments for bad debts expense, by 

recomputing the amount of expected losses on the receivables remaining at that time. This is not illustrated because the adjustment is not a transaction involving foreclosed 

property and the allowance accounts remain as they were after the foreclosed property transactions. See the Pre-Credit Reform accounting guide for an example of the bad debt 

expense adjusting entry.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 73 of 97 August 2017

Closing Entries

To record the consolidation of actual net-funded resources and reductions for 

withdrawn funds and to record the closing of Expended Authority – Paid

DR CR TC

Budgetary Entry

490200 Delivered Orders - Obligations, Paid [Payments on Foreclosed Property]

420100 Total Actual Resources Collected

 426400 Actual Collections of Rent

 426500 Actual Collections From Sale of Foreclosed Property

Proprietary Entry

None

130

365

 

20

475

 

 F302

 

To close unobligated authority

DR CR TC

Budgetary Entry

461000 Allotments - Realized Resources

 445000 Unapportioned Authority

135

135 F308

Proprietary Entry

None

 

 
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 74 of 97 August 2017

To record the closing of other financing sources to cumulative results of 

operations

DR CR TC

Budgetary Entry

None

 F340

 

Proprietary Entry

3310 Cumulative Results of Operations

 7210 Losses on Disposition of Assets - Other

 

 235

231 

 
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 75 of 97 August 2017

Post-Closing Trial Balance

Debit Credit

Accounts

Budgetary

420100 Total Actual Resources - Collected 515

445000 Unapportioned Authority 515

Total 515 515

Proprietary

101000 Fund Balance With Treasury 515

134100 Interest Receivable - Loans 150

134500 Allowance for Loss on Interest Receivable- [Direct Loans] 320

135000 Loans Receivable 200

135900 Allowance for Loss on Loans Receivable 100

155100 Foreclosed Property 25

155900 Foreclosed Property - Allowance 5

331000 Cumulative Results of Operations 465

Total 890 890
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 76 of 97 August 2017

Financial Statements

BALANCE SHEET

Total

Assets

Intragovernmental

1. Fund Balance with Treasury (101000E) 515

6. Total Intragovernmental (This line is calculated. Equals the sum of lines 1 through 5.) 515

9. Accounts receivable, net (134100E) 150

11. Direct Loan and Loan Guarantees, net (134500E, 135000E, 135900E, 155100E, and 155900E. ) (200)

15. Total Assets (This line is calculated. Equals the sum of lines 6 through 14.) $465

Liabilities:

28. Total Liabilities (calc.) 0

Net Position:

30. Unexpended Appropriations (310100E) 0

33. Cumulative Results of Operations - All Other Funds (331000E and 721000E) 465

35. Total Net Position – All Other Funds (calc.) 465

37. Total Liabilities and Net Position (calc.) $465
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 77 of 97 August 2017

STATEMENT OF NET COST

 Total

Gross Program Costs:

1. Gross costs (721000E) 235

3. Net program costs: (This line is calculated. Equals sum of lines 1 minus 2.) 235

5. Net program costs including Assumption Changes: (This line is calculated. Equals sum of lines 3 through 4.) 235

8. Net cost of operations (This line is calculated. Equals the sum of lines 5 and 6 minus 7.) 235

STATEMENT OF CHANGES IN NET POSITION

Cumulative Results of Operations:

1. Beginning Balances

1. Cumulative Results of Operations (331000B) 700

15. Net Cost of Operations (+/-) (235)

17. Cumulative Results of Operations (This line is calculated. Equals sum of lines 3 and 16.) 465
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 78 of 97 August 2017

STATEMENT OF BUDGETARY RESOURCES

(Non-budgetary Financing Fund)

Total

Budgetary resources:

1000 Unobligated balance brought forward, Oct 1 (420100B) 150

1890 Spending authority from offsetting collections (discretionary and mandatory) ((426400E65, 426500E66) 495

1910 Total budgetary resources 645

Status of budgetary resources:

2190 New obligations and upward adjustments (total) (490200E) 130

Unobligated balance, end of year:

2204 Apportioned, unexpired account (461000E) 135

2413 Expired unobligated balance, end of year (44500E) 380

2490 Unobligated balance, end of year (total) (This line is calculated. Equals the sum of lines 2204 and 2413.) 515

2500 Total budgetary resources (This line is calculated. Equals the sum of lines 2190 and 2490.) 645

Change in obligated balance:

3020 Outlays (gross) (-) (490200E) 130

3200 Obligated balance, end of year (+ or -) 130

4176 Actual offsetting collections (discretionary and mandatory) (426400E, 426500E) (495)

Budget authority and outlays, net:

4190 Outlays, net (total) (discretionary and mandatory) (365)

65 From rent.

66 From sale of foreclosed property.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 79 of 97 August 2017

SF 133: Report on Budget Execution and Budgetary Resources &

Schedule P Budget Program and Financing Schedule 

ACTUAL COLUMN FOR YEAR 1 REPORTING

SF133 Line Sch P Line

BUDGETARY RESOURCES

All accounts:

0900 Total new obligations (490200E) (130)

Unobligated balance:

1000 Unobligated balance brought forward, October 1 (420100B) 150 150

2190 New obligations and upward adjustments (total) (130)

2201 Available in the current period (451000E, 461000E) 515

CHANGE IN OBLIGATED BALANCE

Unpaid obligations:

3010 New obligations, unexpired accounts 0 0

3020 Outlays (gross) (490200E) 130 130

BUDGET AUTHORITY AND OUTLAYS, NET

Discretionary:

Gross budget authority and outlays:

4011 Outlays from discretionary balances (490200E) 130 130

4020 Outlays , gross (total) (490200E) 130 130

4070 Budget authority, net (discretionary) 0 0

4080 Outlays, net (discretionary) 130 130
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 80 of 97 August 2017

Note 8: Credit Program Note

NET REALIZABLE VALUE OF LOAN ASSETS

Loan Assets Related to Direct Loans Obligated Before October 1, 1991:67

 Loans Receivable, Gross (135000) 200

 Interest Receivable (134100) 150

 Total Receivables 350

 Less Allowance for Loss (134100 & 135000) (420)

 Net Realizable Value of Receivables68 (70)

 Foreclosed Property (155100) 25

 Less Allowance for Loss (155900) (5)

 Net Realizable Value of Foreclosed Property 20

 Net Realizable Value of Loan Assets $(50)

67If these loan assets were related to defaulted guaranteed loans, the heading would be “Loan Assets Related to Loan Guarantees Obligated Before October 1, 1991.”

68The sum of the allowance for loss account 135900–exceeds the amount of the assets to which they apply, because the scenario does not illustrate year-end adjustments for bad 

debts. The net realizable value of the receivables would be a positive number. The adjustment for bad debts expense related to allowance for losses on receivables is illustrated in 

a separate guide on Pre-Credit Reform accounting.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 81 of 97 August 2017

APPENDIX I: YEAR-END ADJUSTMENTS TO VALUATION OF FORECLOSED PROPERTY

Often, a Federal credit program agency will foreclose on collateral property and dispose of it in the same fiscal year. The transactions 

in the body of this guide illustrate how an agency record and report transactions to acquire repair and maintain, rent, and sell 

foreclosed property. In some instances, foreclosed property will be sold in a later fiscal year than that during foreclosure. This 

appendix discusses the valuation of foreclosed property existing at the Balance Sheet date under Credit Reform and Pre-Credit 

Reform.

CREDIT REFORM VALUATION

Under Credit Reform, loan assets (receivables and foreclosed property) are valued at the present value of their cash flows. An 

agencies report this by listing and summing the receivables, and subtracting an allowance for subsidized costs from the sum of the 

receivables to yield their net cash flow. This reporting is illustrated via the credit program footnote in Scenarios 1 and 2.

Each year, an agency re-estimate cash flows and increase or decrease the allowance for subsidy for each cohort of loans (by risk 

categories under each cohort, if any). The agency recognizes an additional subsidy expense when the allowance is increased, and a 

decrease in subsidy expense when the allowance is decreased. This is illustrated in the direct loan programs guide. The entries and 

methodologies are essentially the same for loan assets related to defaulted guaranteed loans and those related to direct loans, though an 

agency must report each separately. 

Since no allowance account related solely to foreclosed property is recognized (the allowance account applies to the sum of the noncash loan assets), the guide does not illustrate the recording and reporting of adjustments to the allowance for subsidy caused by 

changes in cash flows relating to foreclosed property. Refer to the sections on upward and downward adjustments relating to direct 

loan, non-cash assets discussed in the accounting and reporting for direct loans guide under Credit Reform concepts.

Pre-Credit Reform–Present Value Used

Agencies may use either present value or net realizable value concepts for recording and valuing non-cash loan assets for Pre-Credit 

Reform direct loans or defaulted guaranteed loans. If agencies use present value concepts, the valuation of the receivables and 
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 82 of 97 August 2017

foreclosed property and related accounting and reporting are basically the same as that under Credit Reform. Agencies should use 

account 680000, “Future Funded Expenses.”

Pre-Credit Reform–Net Realizable Value Used

Under the net realizable value concept, separate valuations are made for each receivable (accounts receivable, loans receivable, 

interest receivable, penalties and late charges receivable, etc.) and for foreclosed property. Accounting and reporting related to the 

valuation, accounting, and reporting of Pre-Credit Reform receivables on a net realizable value basis is presented in the Pre-Credit 

Reform guide. This section discusses valuation, accounting, and reporting for Pre-Credit Reform foreclosed property. 

SFFAS No. 3, Accounting for Inventory and Related Property, governs the valuation of Pre-Credit Reform foreclosed property when 

the present value of cash flows is not used as a basis for valuation. In that case, SFFAS No. 3 specify that the lower of cost of market 

rule be used.69 This means that in valuing foreclosed property on the Balance Sheet, it be reduced by a related valuation account 

which, when netted against the gross amount of foreclosed property, yields the lower of what the property cost (as determined via the 

transactions discussed in the body of this case), or what its estimated fair market value is at the Balance Sheet date. While foreclosed 

property may thus be reported at lower than cost if its fair market value is less, it cannot be valued at greater than cost, even if the fair 

market value is more. This is essentially the same rule as used in commercial accounting.

Assume that foreclosed property is taken during fiscal year A, and at the end of that year, it is on the books at a value of $100, based 

on transactions involving acquisition, repairs and maintenance, and rentals. The agency does not sell the property until fiscal year E,

and no additional transactions occur, except those related to valuation for balance sheet purposes at the end of each of the fiscal years 

A, B, C, and D. The agency determines fair market value for each of those fiscal years as follows:

Fiscal Year Fair Market Value

A $96

B $93

C $98

D $102 

69See SFFAS No. 3, Accounting for Inventory and Related Property, par. 86.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 83 of 97 August 2017

The journal entries to value the foreclosed property on the balance sheet for each year and to close the accounts at year-end are set 

forth below, along with related reporting (solely for these transactions). All entries are proprietary, as the revaluation of foreclosed 

property to the lower of cost or market does not affect budgetary resources or the status of resources. The Balance Sheet and 

Statement of Changes in Net Position assume that the cumulative results of operations in fiscal year A before valuation are $100 for 

illustrative purposes only. Additionally, the balance sheet presents details of the cost and market valuations, normally found in the 

credit program footnote. This detail is not illustrated for brevity. The Statement of Budgetary Resources is not presented, since no 

budgetary accounts are affected. 
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 84 of 97 August 2017

 TRANSACTIONS

Fiscal Year A

To value the property at the lower of cost ($100) or market ($96).

DR CR TC

Budgetary Entry

None

 

Proprietary Entry

679000 Other Expenses Not Requiring Budgetary Resources

 155900 Foreclosed Property - Allowance

4

 

4

 

 

 

D518

To close the expense account.

DR CR TC

Budgetary Entry

None

 

Proprietary Entry

331000 Cumulative Results of Operations

 679000 Other Expenses Not Requiring Budgetary Resources

 4

 

 4 

 

 F336
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FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 85 of 97 August 2017

FINANCIAL STATEMENTS

Fiscal Year A

BALANCE SHEET

Total

Assets:

Intragovernmental

11. Direct Loan and Loan Guarantees, net (155100E, 155900E) 96

15. Total Assets (This line is calculated. Equals the sum of lines 6 through 14.) 96

Liabilities:

28. Total Liabilities (This line is calculated. Equals the sum of lines 20 through 27.) 0

Net Position:

30. Unexpended Appropriations – Funds From Dedicated Collections (310100E) 0

33. Cumulative results of operations - All Other Funds (331000E) 96

35. Total Net Position – All Other Funds (This line is calculated. Equals the sum of lines 31 and 33.) 96

36. Total Net Position (This line is calculated. Equals the sum of lines 34 and 35.) 96

37. Total Liabilities and net position (This line is calculated. Equals the sum of lines 28 and 36.) 96
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 86 of 97 August 2017

STATEMENT OF NET COST

 Total

Gross Program Costs:

1. Gross costs (679000E) 4

2. Less earned revenue 0

3. Net program costs: (This line is calculated. Equals the sum of lines 1 minus 2.) 4

5. Net program costs including Assumption Changes: (This line is calculated. Equals the sum of lines 3 through 4.) 4

8. Net cost of operations (This line is calculated. Equals the sum of lines 5 and 6 minus7.) 4

STATEMENT OF CHANGES IN NET POSITION

Total

Cumulative Results from Operations:

1. Beginning Balances

1. Cumulative Results of Operations (331000B) 100

3. Beginning balances, as adjusted (This line is calculated. Equals the sum of lines 1 through 2B.) 100

15. Net Cost of Operations (+/-) (4)

17. Cumulative Results of Operations (This line is calculated. Equals sum of lines 3 and 16.) 96
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 87 of 97 August 2017

TRANSACTIONS

Fiscal Year B

To value the property at the lower of cost ($100) or market ($93). 70

DR CR TC

Budgetary Entry

None

 

Proprietary Entry

679000 Other Expenses Not Requiring Budgetary Resources

 155900 Foreclosed Property - Allowance

 3

 

 3 

 

 D518

To close the expense account

DR CR TC

Budgetary Entry

None

 

Proprietary Entry

331000 Cumulative Results of Operations

 679000 Other Expenses Not Requiring Budgetary Resources

 3

 

 3 

 

 F336

70The amount in the valuation account must be $7, which is the amount of the decline from cost to market ($100 - $93). The balance before this entry (see the fiscal year A 

amount) was $4; therefore, the agency must increase the amount in account 155900 by $3.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 88 of 97 August 2017

FINANCIAL STATEMENTS

Fiscal Year B

BALANCE SHEET

Total

Assets:

Intragovernmental

11. Direct Loan and Loan Guarantees, net (155100E, 155900E) 93

15. Total Assets (This line is calculated. Equals the sum of lines 6 through 14.) 93

Liabilities:

28. Total Liabilities (This line is calculated. Equals the sum of lines 20 through 27.) 0

Net Position:

30. Unexpended Appropriations – Funds From Dedicated Collections (310100E) 0

33. Cumulative results of operations - All Other Funds (331000E) 93

35. Total Net Position – All Other Funds (This line is calculated. Equals the sum of lines 31 and 33.) 93

36. Total Net Position (This line is calculated. Equals the sum of lines 34 and 35.) 93

37. Total Liabilities and net position (This line is calculated. Equals the sum of lines 28 and 36.) 93
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 89 of 97 August 2017

STATEMENT OF NET COST

 Total

Gross Program Costs:

1. Gross costs (679000E) 3

2. Less earned revenue 0

3. Net progam costs: (This line is calculated. Equals the sum of lines 1 minus 2.) 3

5. Net program costs including Assumption Changes: (This line is calculated. Equals the sum of lines 3 through 4.) 3

8. Net cost of operations (This line is calculated. Equals sum of lines 5 and 6 minus7.) 3

STATEMENT OF CHANGES IN NET POSITION

Total

Cumulative Results from Operations:

1. Beginning Balances

1. Cumulative Results of Operations (331000B) 96

3. Beginning balances, as adjusted (This line is calculated. Equals sum of lines 1 through 2B.) 96

15. Net Cost of Operations (+/-) (3)

17. Cumulative Results of Operations (This line is calculated. Equals the sum of lines 3 and16.) 93
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 90 of 97 August 2017

TRANSACTIONS

Fiscal Year C

To value the property at the lower of cost ($100) or market ($98). 71

DR CR TC

Budgetary Entry

None

 

Proprietary Entry

155900 Foreclosed Property – Allowance

 679000 Other Expenses Not Requiring Budgetary Resources

 5

 

 5 

 D518R

To close the expense account

DR CR TC

Budgetary Entry

None

 

Proprietary Entry

679000 Other Expenses Not Requiring Budgetary Resources

 331000 Cumulative Results of Operations

 5

 

 5 

 

F336R

71The amount in the valuation account must be $2, which is the amount of the decline from cost to market ($100 - $98). The balance before this entry (see the fiscal year B 

amount) was $7; therefore, the agency must reduce the amount in account 155900 by $5.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 91 of 97 August 2017

FINANCIAL STATEMENTS

Fiscal Year C

BALANCE SHEET

Total

Assets:

Intragovernmental

11. Direct Loan and Loan Guarantees, net (155100E, 155900E) 98

15. Total Assets (This line is calculated. Equals the sum of lines 6 through 14.) 98

Liabilities:

28. Total Liabilities (This line is calculated. Equals the sum of lines 20 through 27.) 0

Net Position:

30. Unexpended Appropriations – Funds From Dedicated Collections (310100E) 0

33. Cumulative results of operations - All Other Funds (331000E) 98

35. Total Net Position – All Other Funds (This line is calculated. Equals the sum of lines 31 and 33.) 98

36. Total Net Position (This line is calculated. Equals the sum of lines 34 and 35.) 98

37. Total Liabilities and Net Position (This line is calculated. Equals the sum of lines 28 and 36.) 98
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FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 92 of 97 August 2017

STATEMENT OF NET COST

 Total

Gross Program Costs:

1. Gross costs (679000E) 5

2. Less earned revenue 0

3. Net program costs: (This line is calculated. Equals the sum of lines 1 minus 2.) 5

5. Net program costs: including Assumption Changes: (This line is calculated. Equals the sum of lines 3 through 4.) 5

8. Net cost of operations (This line is calculated. Equals the sum of lines 5 and 6 minus 7.) 5

STATEMENT OF CHANGES IN NET POSITION

Total

Cumulative Results from Operations:

1. Beginning Balances

1. Cumulative Results of Operations (331000B) 93

3. Beginning balances, as adjusted (This line is calculated. Equals the sum of lines 1 through 2B.)

15. Net Cost of Operations 5

17. Cumulative Results of Operations (This line is calculated. Equals the sum of lines 3 and 16.) 98
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 93 of 97 August 2017

TRANSACTIONS

Fiscal Year D

To value the property at the lower of cost ($100) or market ($102). 72

DR CR TC

Budgetary Entry

None

 

Proprietary Entry

155900 Foreclosed Property - Allowance

 679000 Other Expenses Not Requiring Budgetary Resources 

 2

 

 2 

 

 D518

To close the expense account

DR CR TC

Budgetary Entry

None

 

Proprietary Entry

679000 Other Expenses Not Requiring Budgetary Resources 

 331000 Cumulative Results of Operations

 2

 

 2 

 

F336R

72Although the market value increased $4, the agency cannot report the foreclosed property above cost. The amount in the valuation account must be $0, which allows reporting 

the lower of the cost ($100) or market ($102). Therefore, the agency must reduce the amount in account 155900 by $2.
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 94 of 97 August 2017

BALANCE SHEET

Total

Assets:

Intragovernmental

11. Direct Loan and Loan Guarantees, net (155100E) 100

15. Total Assets (This line is calculated. Equals the sum of lines 6 through 14.) 100

Liabilities:

28. Total Liabilities (This line is calculated. Equals the sum of lines 20 through 27.) 0

Net Position:

30. Unexpended Appropriations – Funds From Dedicated Collections (310100E) 0

33. Cumulative results of operations - All Other Funds (331000E) 100

35. Total Net Position – All Other Funds (This line is calculated. Equals the sum of lines 31 and 33.) 100

36. Total Net Postion (This line is calculated. Equals sum of lines 34 and 35.) 100

37. Total Liabilities and Net Position (calc.) 100
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FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 95 of 97 August 2017

STATEMENT OF NET COST

 Total

Gross Program Costs:

1. Gross costs (679000E) (2)

2. Less earned revenue 0

3. Net program costs: (This line is calculated. Equals the sum of lines 1 minus 2.) (2)

5. Net program costs including Assumption Changes: (This line is calculated. Equals the sum of lines 3 through 4.) (2)

8. Net cost of operations (This line is calculated. Equals sum of lines 5 and 6 minus 7.) (2)

STATEMENT OF CHANGES IN NET POSITION

Total

Cumulative Results of Operations:

1. Beginning Balances

1. Cumulative Results of Operations (331000B) 98

3. Beginning balances, as adjusted (This line is calculated.) Equals sum of lines 1 through 2B.) 98

15. Net Cost of Operations (+/-) (2)

17. Cumulative Results of Operations (This line is calculated. Equals sum of lines 3 and 16.) 100
GUIDE FOR BASIC ACCOUNTING AND REPORTING

FOR FORECLOSED PROPERTY

IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 96 of 97 August 2017

APPENDIX II: REFERENCES

This appendix lists some key references and Web sites for readers who want to obtain additional information.

OFFICE OF MANAGEMENT AND BUDGET

 OMB Circular No. A-136 

 OMB Circular No. A-11, Preparation, Submission, and Execution of the Budget

 OMB Credit Model

 OMB Publications Office at (202) 395-7332

 Office of Federal Financial Management (202) 395-3993

 Website: www.whitehouse.gov/omb 

FEDERAL ACCOUNTING STANDARDS ADVISORY BOARD

Statement of Federal Financial Accounting Standards (SFFAS) and Statement of Federal Financial Accounting Concepts (SFFAC) 

No. 1, 

 SFFAS No. 1, Accounting for Selected Assets and Liabilities

 SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees

 SFFAS No. 3, Accounting for Inventory and Related Property

 SFFAS No. 7, Accounting for Revenue and Other Financing Sources (including related implementation guide) 

 SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and Loan Guarantees
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IN FEDERAL CREDIT PROGRAMS

Foreclosed Property Page 97 of 97 August 2017

 SFFAS No. 19, Technical Amendments to Accounting Standards for Direct Loans and Loan Guarantees

 SFFAC No. 2, Entity and Display (as amended by SFFAS No. 7)

Accounting and Auditing Policy Committee, Technical Release No. 3: Preparing and Auditing Direct Loan and Loan Guarantee 

Subsidies Under the Federal Credit Reform Act

 FASAB Staff at (202) 512-7350

 Website: www.fasab.gov

 BUREAU OF THE FISCAL SERVICEU.S. Standard General Ledger (USSGL) codified in the Treasury Financial Manual 

(TFM)

 Budgetary Accounting in the Federal Government

 Illustrative Scenarios in Accounting for Credit Programs (FRAD Staff)

 TFM Volume I, Part 2, Chapter 4600 Treasury Reporting Instructions for Credit Reform Legislation

 Present Value Monograph